Services Bridging Cryptocurrencies and Investors Are Emerging

In the week starting Monday, March 5, some topical services emerged to bridge cryptocurrencies and investors.

The first service is that the U.S. company Coinbase has announced that it will develop and launch its own cryptocurrency index fund with a large market capitalization. Coinbase will list this cryptocurrency index fund on its own digital currency exchange GDAX and prepare for investment trading in the index fund. Four digital currencies will be included in the index fund, and they will be weighted by market capitalization. This means that at its launch the index fund will be comprised of 62% Bitcoin, 27% Ethereum, 7% Bitcoin Cash, and 4% Litecoin. Investors can easily invest in expected-to-rise cryptocurrencies by purchasing assets in Coinbase’s cryptocurrency index fund.

Another similar service will be provided by Grayscale Investments Inc., which had previously been selling investments in Bitcoin funds to institutional investors, and which has now decided to newly establish four new cryptocurrency funds. The four cryptocurrencies are Bitcoin Cash, Ethereum, Litecoin, and Ripple. Investments in these funds will be sold to qualified accredited investors who possess a certain level of investment experience and asset size. Investors can invest in one of these Grayscale Investments funds in the expectation that the value of the fund will increase without having to manage the cryptocurrency fund themselves.

Originally, it was important that the owners of some cryptocurrency could control their own assets. However, the entities such as institutional investors and hedge funds that are expected to enter cryptocurrency trading in the future will not necessarily have an appropriate cryptocurrency storage system, therefore it is important that they have such capabilities as a fund that stores the cryptocurrency for them on their behalf.

It seems that the business of providing services that enable existing investors to access cryptocurrencies more conveniently will significantly grow in the future.

On the other hand, if the owner of some cryptocurrency does not themselves control the private key associated with their cryptocurrency wallet, there is the possibility of the owner losing their cryptocurrency if an irregular incident occurs at the location where the cryptocurrency has been stored, in the same manner as if cryptocurrency had been deposited in a trading exchange. It is a big advantage of cryptocurrency that the investor can manage their cryptocurrency assets by themselves and only they can control them. However, in the current situation in which cryptocurrency is being used exclusively for investment purposes, it may be economically rational to provide a business service of storing cryptocurrency assets.